Saturday, January 30, 2010
Good news from Amazon, bad news from Borders, mixed news from B&N
Amazon.com's 2009 fourth-quarter earnings jumped 71 percent, as shoppers spent more than ever on books and a wide range of other items during the holiday season.
Despite the sluggish economy, Amazon did well throughout the year, drawing shoppers with its Kindle e-reader and low prices on other products. Amazon predicted first-quarter 2010 revenue that exceeds analyst expectations.
Amazon said it earned $384 million, or 85 cents per share, in the October-December period, compared with $225 million, or 52 cents per share, in the year-ago quarter, which included a holiday season that Amazon had described then as its "best ever," only to be surpassed by the 2009 holidays.
Revenue rose 42 percent to $9.52 billion. That includes a $200 million contribution from online shoe and apparel store Zappos, which Amazon recently bought.
Revenue from books, CDs, DVDs and other media climbed 29 percent to $4.68 billion. Electronics and other "general merchandise" revenue rose nearly 60 percent to $4.61 billion. Revenue increased 37 percent in North America and nearly 49 percent elsewhere.
Amazon had previously said it reached a Kindle milestone on Christmas Day, when it sold more copies of eBooks than printed books for the first time. The company is attracting growing competition from other of e-reader suppliers including Apple, which announced its iPad on Wednesday.
In hopes of staying ahead of the pack, Amazon reducing the Kindle's price yet again during the quarter, cutting $40 off to reach $259.
Barnes & Noble has come out with its $259 Nook, and Sony has increased its Reader lineup with lower- and higher-priced models. Apple's iPad will start at $499.
For the full year, Amazon earned $902 million, or $2.04 per share, on $24.5 billion in revenue.
The Amazon results sharly contrasted with recent developments at competitor Borders -- the second-largest book retailer in the U.S. Last week it announced that it is firing 124 employees, or about 10% of its corporate staff.
The layoffs come only a few days after Chief Executive Ron Marshall quit to become CEO of A&P. Marshall has been succeeded on an interim basis by Michael Edwards, who had been the retailer's chief merchandising officer.
The layoffs were expected in light of the company's poor holiday sales performance. Revenue at Borders superstores for the 11-week holiday period ended January 16 dropped 15% to $649.2 million from a year earlier. Same-store sales also fell 15%.
Borders, which on April 1 must repay a $42.5 million senior secured loan from Pershing Square Capital Management LP, its largest investor, is trying to chart a new course as bookselling comes under increasing pressure from cheap electronic books and aggressive discounting of hardcover titles online.
Anne Roman, a spokeswoman for Borders, said some of the corporate layoffs were in information technology and finance. She said there have been some redundancies in those areas in recent months because the retailer has combined its various computer systems. She added that 40 distribution workers in California and Tennessee also have been laid off. Borders employs about 22,500 worldwide.
Borders has been closing stores in the U.S. since 2007. The no-longer-related British Borders has gone out of business.
Barnes & Noble, the world's largest bookseller, reported that store sales for the nine-week holiday period from November 1, 2009 to January 2, 2010 declined by 5% over the same period a year ago. Online sales at Barnes & Noble.com increased 17% for the holiday selling season. (info from the AP and the Wall Stree Journal.)